July 30, 2002

Senate Begins Work on Funding Bill of Housing and Veterans' Programs

The U.S. Senate has begun work on next year's budgets for the U.S. Departments of Veterans' Affairs (VA) and the Housing and Urban Development (HUD), including housing and homeless programs serving adults with severe mental illnesses. On July 25, the Senate Appropriations Committee cleared its version of the FY 2003 VA-HUD spending bill (S 2797) - the massive $91.2 billion measure that contains both the $32.1 billion HUD budget and $26.5 billion VA budget. It is not expected that the full Senate will take up the VA-HUD spending bill until after the August recess. Likewise, the House Appropriations Committee will not begin work on its bill until September at the earliest. Congress is supposed to complete action on this measure before FY 2003 begins on October 1 - a goal Congress will be hard pressed to meet.

Even though the federal government is now returning to an era of budget deficits, the Senate Appropriations Committee was able to include important increases for housing and veterans' programs of importance to individuals with severe mental illnesses.

HOUSING PROGRAMS

The Senate VA-HUD bill includes a $9.65 million increase for the HUD Section 811 program, bringing the program up to $250.5 million. This is the same as the Bush Administration's request for the program. The Section 811 program provides funding to non-profit organizations to develop group homes and other community housing options that serve adults with severe disabilities, including severe mental illnesses. Section 811 is critical source of funding for housing for non-elderly adults with severe mental illnesses.

In addition to adding funds for the 811 program, the Senate bill also requires HUD to limit the amount of program funding that can be diverted to tenant-based rental assistance, away from capital advances to non-profits and project-based rental assistance (the traditional form of 811 funding). Tenant-based assistance, also known as a voucher, provides a monthly rent subsidy to individual eligible low-income tenants, thereby allowing them to select their own housing in the community (typically without supports linked to the housing). Capital advances and project-based assistance are by contrast direct assistance to non-profit sponsors to increase the stock of affordable housing for specific populations and typically involves linking support services directly to housing.

In FY 2003, both the capital advance/project-based and tenant-based ("mainstream") sides of the Section 811 program face a continued challenge with respect to renewal of expiring rent subsidies. In both cases, these ongoing obligations to renew funding associated with units already in existence are expected to drain limited resources limited resources from the Section 811 program. For the capital advance/project-based side, HUD estimates that $6 million will be needed to renew expiring project- based rent subsidies (also known as PRACs).

On the tenant-based mainstream side, HUD projects that $32 million will be needed in FY 2003 to renew expiring tenant-based rent subsidies that were originally funded in prior years. This is an increase of $9 million over the amount Congress allocated in FY 2002 for Section 811 tenant-based renewals ($23 million). The end result is that the burden for renewing project-based and tenant-based rent subsidies will drain off as much as $38 million from the Section 811 program in FY 2003 - nearly 4 times the size of the increase in the Senate bill. This large and growing renewal burden is of great concern to the Senate Appropriations Committee and a new requirement is included in S 2797 requiring HUD to come forward with individual line-item requests for renewals.

Homeless Funding Increased, Shelter Plus Care Renewal Funding Added

The Senate VA-HUD bill includes a $92.5 million increase for federal homeless programs under the McKinney-Vento Homeless Assistance Act, bringing the program's funding up to $1.129 billion. This is $85.5 million more than the Bush Administration requested for FY 2003. McKinney-Vento includes a range of permanent housing and service programs such as Shelter Plus Care, SHP (permanent supportive housing), Emergency Shelter Grants, Section 8 Moderate Rehab and Single Room Occupancy. Nearly all of these permanent and transitional housing programs serve currently or former homeless adults with severe mental illnesses and/or co-occurring substance abuse.

The Senate bill continues the current policy of establishing a minimum 30% set aside of overall homeless program funding for development of permanent housing serving chronically homeless people with disabilities - as opposed to services for homeless individuals and families (the bill would also continue the 25% local match required for services). NAMI supports this policy as the most effective means of developing at least 150,000 units of permanent supportive housing and ending chronic homelessness among people with severe mental illness. The Senate bill builds on this policy by adding a requirement for HUD to ensure that permanent supportive housing developed under McKinney-Vento is actually targeted to chronically homeless people with disabilities.

The Senate bill also includes $193 million for renewal of all expiring rent subsidies under the Shelter Plus Care (S+C) program and SHP permanent housing programs. The Bush Administration did not request any funds for this purpose. S+C is a critical permanent housing resource for adults with severe mental illnesses. Many S+C (as well as permanent supported housing, SHP) projects that were begun in the 1990s are now facing a funding crisis as 5-year rent subsidies are now coming up for renewal. In states and communities across the country, this housing is at risk in cases where local officials are giving low priority ratings to rent subsidy renewals as part of HUD's "Continuum of Care" process for allocating federal homeless funds at the local level.

Without separate funding for S+C and SHP renewals, thousands of formerly homeless adults with severe mental illnesses will be placed at risk of losing subsidized housing through no fault of their own. NAMI therefore supports continuation of BOTH the separate $193 million account for Shelter Plus Care and SHP permanent housing renewals. NAMI also supports efforts to renew these rent subsidies through the much larger $17.4 billion Section 8 Housing Certificate Fund (HCF) as proposed in separate House legislation (HR 3995).

Section 8 Vouchers Targeted to People With Disabilities

The Senate VA-HUD bill proposes to expand the existing allocation of Section 8 tenant-based vouchers for non-elderly adults with disabilities (including people with severe mental illnesses) by $40 million. Over the past five years, Congress has appropriated nearly $300 million for vouchers targeted specifically to individuals who have lost, or will in the future lose, access to housing as a result of designation of assisted and public housing as "elderly only."

As in the past, the effort to push for a separate allocation of tenant-based assistance for people with disabilities was championed by Representative Rodney Frelinghuysen (R-NJ) and Senator Kit Bond (R-MO). NAMI is also grateful to the Chair of the Senate VA-HUD Appropriations Subcommittee Barbara Mikulski (D-MD). This year's allocation of $40 million is even more noteworthy since the Senate was able to allocate only $90 million for 15,000 new vouchers given tight budget constraints (in other words, nearly half of all the new rental vouchers funded in the bill go to people with disabilities). The report accompanying S 2797 also directs HUD to increase its oversight of housing authorities receiving disability vouchers to ensure that they are targeted to the populations Congress intended, i.e. non-elderly people with disabilities no longer eligible for public and assisted housing properties that are "elderly only." The Senate Appropriations Committee report also directs HUD to reform the Section 8 tenant-based program to address problems that many voucher-holders experience in trying find decent and safe housing in the rental market.

VETERANS PROGRAMS

The FY 2003 Senate VA-HUD Appropriations bill increases overall spending for the Veterans Health Administration (VHA) by more than $2.56 billion - and more than $1.14 billion above President Bush's request. The VHA budget includes funding for 172 medical centers and 876 outpatient clinics. The VHA is one of the largest systems in the country that provides both inpatient and outpatient psychiatric care. It is estimated that 454, 598 veterans have a service connected disability due to a mental illness. Of great concern to NAMI are the 130,211 veterans who are service connected for psychosis (104,593 of whom were treated in the VA for schizophrenia, according to 1999 data). The Senate Appropriations Committee report accompanying S 2797 contains a directive to the VA to continue studying and developing recommendations for reforming the Veterans Equitable Resource Allocation (VERA) system. VERA is the VA's system for allocating health care dollars according to the number of veterans with the highest priority medical needs and best practices in the health care system. In NAMI's view, the VERA system provides disincentives for providing mental illness treatment - underfunding the cost of providing services to veterans with severe mental illness by as much as 20%. In FY 2000, an additional $498 million was needed to make the VERA allocation equal to the costs of its mental health cohorts. NAMI strongly supports a recommendation from the VA's own SCMI Committee that the VHA ensure that the funding model is cost neutral for care of veterans with severe mental illnesses. For medical research at the VA, the Senate bill includes a $29 million increase over current funding (up to $400 million).